Indonesia has strengthened the inspection of the content of rare earth elements (REE) in exported mineral products, resulting in delays in the export of some nickel and alumina products, and causing concerns about potential disruptions to supply.
The affected products include MHP, nickel pig iron (NPI), nickel slag, and alumina. Market experts stated that since the inspection reports (LS) have not been issued, some goods from some industrial parks have been blocked from shipment since last week. A MHP producer said that some of the July shipments might be delayed, but most market participants expect that exports will return to normal after the government further clarifies the relevant regulations.
However, market experts believe that the overall impact is limited. The global nickel market supply is still sufficient, and the spot supply is tight, which alleviates market concerns about short-term export delays in Indonesia.
This delay mainly stems from the lack of clear management requirements for rare earth elements during export verification. Indonesia has not yet set minimum content standards for rare earths, unified testing methods, or specific implementation rules. Market experts stated that rare earth testing requires professional equipment and qualified laboratories, and it faces significant challenges to be fully implemented in the short term.
The meeting minutes issued by the Ministry of Energy and Mineral Resources of Indonesia on July 24th showed that there is still a lack of unified testing standards, limited laboratory capabilities, and different understandings of relevant regulations by different government departments. As a result, 102 LS reports are pending issuance. The minutes stated that further research and more clear guiding principles need to be developed before the comprehensive policy is introduced.
Trace rare earth elements are generally present in some nickel products and mineral products, but Indonesia has not yet clearly defined at what content level they need to be managed according to special regulations. Market experts predict that the government may soon issue technical guidelines on rare earth limits and export procedures, and some people expect further clarification within this week. Rare earths are not included in the nickel product royalty system of Indonesia, but have been included in the tax framework for tin products.
Many nickel intermediates and downstream products in Indonesia are highly dependent on the export market. Most MHP and nickel slag are sold overseas, and about 73% of NPI production is used for export, while the sulfuric nickel and electric nickel produced by further processing of nickel intermediates are mainly targeted at overseas markets.
Market experts stated that if the export delays continue, it may affect the cash flow and operational arrangements of producers and intensify market concerns about the uncertainty of Indonesia's regulatory policies. Driven by supply disruption concerns, the September nickel contract price of the Shanghai Futures Exchange rose to 132,850 yuan/ton on July 27th, but then fell back as most traders believed that the related issues were only temporary.
